Correlation Between Microsoft and FORWARD AIR
Can any of the company-specific risk be diversified away by investing in both Microsoft and FORWARD AIR at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Microsoft and FORWARD AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and FORWARD AIR P, you can compare the effects of market volatilities on Microsoft and FORWARD AIR and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Microsoft with a short position of FORWARD AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and FORWARD AIR.
Diversification Opportunities for Microsoft and FORWARD AIR
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microsoft and FORWARD is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and FORWARD AIR P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORWARD AIR P and Microsoft is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Microsoft are associated (or correlated) with FORWARD AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORWARD AIR P has no effect on the direction of Microsoft i.e., Microsoft and FORWARD AIR go up and down completely randomly.
Pair Corralation between Microsoft and FORWARD AIR
Assuming the 90 days trading horizon Microsoft is expected to generate 3.63 times less return on investment than FORWARD AIR. But when comparing it to its historical volatility, Microsoft is 3.77 times less risky than FORWARD AIR. It trades about 0.03 of its potential returns per unit of risk. FORWARD AIR P is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,380 in FORWARD AIR P on August 27, 2024 and sell it today you would earn a total of 0.00 from holding FORWARD AIR P or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. FORWARD AIR P
Performance |
| Timeline |
| Microsoft |
| FORWARD AIR P |
Microsoft and FORWARD AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and FORWARD AIR
The main advantage of trading using opposite Microsoft and FORWARD AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, FORWARD AIR can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in FORWARD AIR will offset losses from the drop in FORWARD AIR's long position.| Microsoft vs. AGF Management Limited | Microsoft vs. CHINA EDUCATION GROUP | Microsoft vs. DeVry Education Group | Microsoft vs. Brockhaus Capital Management |
| FORWARD AIR vs. Apple Inc | FORWARD AIR vs. Apple Inc | FORWARD AIR vs. Apple Inc | FORWARD AIR vs. Apple Inc |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |